By Reuters October 24, 1997, 6:30 a.m. PT
Despite increasing scrutiny of its business methods,
Microsoft (MSFT) continued to play offense this
week, wooing Silicon Valley venture capitalists
who normally fund its rivals.
"It was a little odd having these two groups of
people in the same room
together, because frankly it is
true that the VCs [venture
capitalists] are financing a lot of
companies that are the thorn in
Microsoft's side and they [Microsoft] either
acquire, destroy, or assimilate [the start-ups]," one
investor said.
The meeting on Wednesday, dubbed "Silicon
Valley Venture Capitalist Day," was the second of
what Microsoft hopes will be an annual gathering
with venture capitalists, executives at the software
giant said.
Some investors said the atmosphere at the meeting
grew tense at times as the event was just two days
after the Justice Department accused Microsoft of
violating an antitrust pact. The company is charged
with forcing PC makers to include Microsoft's Web
browser on personal computers that have the
Windows 95 operating system preinstalled.
"It's always fun to cavort with the Evil Empire," said
one visitor, referring to the oft-cited antagonist in
the Star Wars movies.
Others noted that Microsoft still appears
determined to capture, at all costs, as much of the
software market as it can.
Some of the roughly 100 venture capitalists at the
meeting said they were hoping to determine which
areas Microsoft will compete in and which it will
disregard.
"[Microsoft's] primary goal is to dominate the
markets they want to dominate," said Steve
Jurvetson, a partner of the venture firm Draper
Fisher Jurvetson. "There were a number of times
during the day where Microsoft seemed unable to
draw any distinction between those businesses they
were likely to enter and those they were not."
The executives said Microsoft was particularly
focused on mass-market products and will continue
to seek to "own" that segment. They said the
company's business does not include vertical niche
markets requiring direct sales efforts and
customization.
Brad Chase, vice president of developer relations
and Internet client marketing at Microsoft, told
Reuters the meeting was intended to emphasize the
"very large opportunity" for venture capitalists
investing in technology that runs on Microsoft's
Windows.
For example, Chase unveiled an initiative to
encourage young start-up companies to work with
Microsoft and use its products in exchange for
discounts on its software, access to new technology
and product information, technical support, and
marketing opportunities. "Start-ups have been the
key to the success of the Windows platform," he
said.
Already, Microsoft has some 70 companies and
300 applicants signed up for the program,
according to Jen Parsons, a product manager who
heads the program. Microsoft said applicants
would need to provide information on their
businesses and the degree to which they intended
to use its software products. Investors said those
facts also could give Microsoft a greater insight into
a start-up's activities.
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